Do I Really Need a Will?
This is a great question that I get asked very frequently in my practice. If you’re asking this yourself, the answer may surprise you.
What I tell my clients is this, in order to understand whether you need a will, you need to understand what will happen if you don’t have one. If you are comfortable with the default laws that govern when someone dies without a will, also known as the intestacy laws, then you may not need a will at all.
What is Dying Intestate?
When someone is said to have died intestate, it means they did not have a valid will in place to deal with their final wishes. As opposed to someone who dies ‘testate’, meaning they did have a valid last will and testament at death.
An intestate estate is governed by statute. Essentially, when someone dies without telling the law what they want to have happen, there needs to be rules in place to direct who is going to be in charge, and who is going to share in the assets of the estate.
Problems with intestate succession can arise when someone who is estranged from the decedent becomes eligible to receive a portion of the estate, because of their family relationship. Although there are almost always exceptions in the law, generally speaking, the court will not decide that a son who has been estranged from the family for 20 years is not entitled to inherit under the intestate laws. In this type of situation, a will would be necessary to avoid this type of undesired outcome.
What are the Intestate Laws?
Intestate succession is governed by two main statutes under the Michigan Compiled Laws. The first law is MCL 700.2102 which deals with inheritance when the decedent had a spouse at the time of death.
The statute states that if the decedent was married and did not leave any surviving children or parents, the spouse receives the entire estate. If the decedent left surviving children the spouse receives the first $150,000 from the estate, then the balance of the property is split with 50% going to the spouse and 50% being divided among the children, by right of representation. If the surviving children are not also children of the spouse, as is often the case in second marriages, the spouse receives the first $100,000 from the estate, then the remainder is divided the same as above.
Let’s take a look at an example.
Harold died at the age of 45. At the time of his death he had failed to set up a will. He is married to his second wife, Cheryl. Harold has two children from a previous marriage. Harold’s estate consists of his old home valued at $175,000, and a 401(k) account with $45,000, for a total estate value of $220,000.
Under the statute above, we know that Cheryl will receive the first $100,000 from the estate. This leaves $120,000 to be divided among Cheryl and Harold’s 2 children. Cheryl receives half of the remainder, or $60,000, and each child receives $30,000.
MCL 700.2103 addresses what happens when a decedent dies without a surviving spouse. In this situation, the decedent’s children split the proceeds of the estate, equally. If there are no surviving children, the estate passes to the decedent’s parents. If the decedent also did not have surviving parents, the estate is divided among the decedent’s siblings by right of representation.
Let’s see another example.
Carrie died intestate and she had a live-in boyfriend. She did not have any children and her parents predeceased her. Carrie is survived by 2 brothers; however, she also had a sister, Mary, who died before Carrie. Mary had two sons.
Carrie’s entire estate totals $150,000. In this scenario, Carrie’s estate is divided into 3 shares, because she had 3 siblings. Carrie’s live-in boyfriend is not considered an heir because they were not married. Carrie’s brothers each receive $50,000. Carrie’s deceased sister’s share passes to her surviving sons and they each receive $25,000.
So, Do You Need a Will?
Ultimately, this decision is up to you. Hopefully you have a better understanding of what happens if you do not set up a will. If you think you want anything other than what the law says will happen, then the answer is ‘yes’.
Categories: Estate Planning